The OPEC + group announced an agreement to increase production by 100,000 barrels per day only beyond August, following its meeting today, Wednesday, noting that the lack of investments led to a weak production capacity.
The market had expected a steady or slight increase in oil production, as most members of the group are already pumping near their maximum production capacities, and they are unable to meet US calls to increase production to help in the face of rising prices.
OPEC + also expressed its concern regarding the insufficient investments in the exploration sector, and said that insufficient investments will affect the availability of sufficient oil supply to meet the growing demand beyond 2023, noting that the limited spare capacity for oil production requires its use with extreme caution.
The United States has asked Saudi Arabia and the United Arab Emirates, two prominent members of OPEC, to pump more oil. US and Western sanctions once morest Russia have caused a rise energy prices In all its forms, this has pushed inflation to its highest levels in several decades and has sharply raised interest rates by central banks.
OPEC has raised production, in line with its goals, by regarding 430,000 barrels and 650,000 barrels per day per month in recent months, and has refused to switch to faster increases in production.
Sources in the group pointed to the lack of additional production capacity among the members to add more production, as well as the need for more cooperation with Russia within the framework of the broader OPEC+ group.
Haitham Al-Ghais, Secretary-General of OPEC, said in statements to Algerian television, “The recovery in demand continues, but it may be at a slower pace than at the beginning of the year and last year.”
He added that challenges in the supply of shale oil in the United States affected the balance of supply and demand.
Wednesday’s meeting discussed production policies from September and possibly beyond. By September, OPEC+ will have ended all of the record production cuts it implemented in 2020 to deal with the collapse in demand caused by the Corona pandemic.
In June, the production of OPEC + members was 3 million barrels per day less than their quotas, as sanctions imposed on some members and reduced investment in others curbed their ability to calm the world’s energy crisis.
Only Saudi Arabia and the UAE are believed to have some additional capacity to increase production.
French President Emmanuel Macron says he has been told that Saudi Arabia and the UAE have very limited ability to increase oil production.
In an interview with Al-Arabiya, an expert in energy strategies, Nayef Al-Dandani, said that the possibility of the OPEC Plus group increasing production is small, but it is a possibility.
Al-Dandani added that all indicators in the markets show pressures on oil prices and supplies.
He pointed out that the speed of demand growth has weakened, with the escalation of recession threats, and the closures in China.